Mike Hunter wrote:
> Especially now that the high profit trucks, that have been subsidizing small
> car prices for the past ten year, are not selling well. The small cars
> will be going up $7,000 or $8,000 in price. Who will want to spend $24,000
> to $26,000 to buy a Fit size car??
>
>
>
>
> "Gosi" <gosinn@gmail.com> wrote in message
> news:8e50e1de-6dd8-4747-91a2-7866309ef568@y21g2000hsf.googlegroups.com...
> On Oct 11, 8:38 am, Jim Higgins <gordian...@hotmail.com> wrote:
>> Rumor of the day
>>
>> G.M. and Chrysler Explore
>> Mergerhttp://www.nytimes.com/2008/10/11/business/11auto.html?_r=1&hp&oref=s...
>>
>> DETROIT — General Motors is in preliminary talks about a possible merger
>> with Chrysler, a deal that could drastically remake the landscape of the
>> auto industry by reducing the Big Three of Detroit automakers to the Big
>> Two.
>>
>> The talks between G.M. and Cerberus Capital Management, the private
>> equity firm that owns Chrysler, began more than a month ago, and the
>> negotiations are not certain to produce a deal. Two people close to the
>> process said the chances of a merger were “50-50” as of Friday and would
>> most likely still take weeks to work out.
>>
>> A merger would be a historic event, with two of the most iconic names in
>> American industry coming together to survive in an increasingly
>> difficult environment. Both have roots dating back decades in Detroit
>> and, with Ford, long dominated the auto industry — until Japanese and
>> other foreign car makers began making inroads into the American market.
>>
>> The auto industry is being pummeled from all sides — by high gas prices
>> that have soured consumers on profitable S.U.V.’s, by a softening
>> economy that has scared shoppers away from showrooms, and by tight
>> credit that is making it difficult for willing buyers to obtain loans.
>> Both G.M. and Chrysler have been struggling with product lineups that
>> are out of sync with consumer demand for smaller, more fuel-efficient
>> cars.
>>
>> General Motors’ stock has fallen from more than $43 a share last year to
>> less than $5, and it is burning through its cash hoard at a rapid rate.
>> Chrysler, as a private company, no longer needs to report its finances.
>>
>> The meetings between General Motors and Cerberus began more than a month
>> ago, said people familiar with the discussions, and the companies have
>> held several talks involving their most senior executives. Given that
>> both G.M. and Chrysler are struggling, the two sides may determine a
>> merger may not be in their best interests.
>>
>> The exploratory talks have included debates over various calculations of
>> the savings that would result from a merger, these people said, but
>> neither side has yet to dig into each others’ private financial books
>> and records.
>>
>> At the same time, Cerberus is continuing to hold talks with other
>> automakers including Nissan and Renault, said people familiar with the
>> discussions. It is unclear at what stage those discussions have reached.
>>
>> Speculation about a possible bankruptcy filing by G.M. has mounted in
>> recent weeks because of the automaker’s dwindling cash reserves. The
>> automaker had $21 billion in cash on hand at the end of the second
>> quarter, but it was burning through more than $1 billion a month.
>>
>> The credit rating firm Standard & Poor’s put G.M. on negative credit
>> watch on Thursday.
>>
>> But G.M. has said it is confident that it can increase its liquidity,
>> and emphasized in a statement released Thursday that it was not
>> considering a bankruptcy filing.
>>
>> G.M. once commanded about 50 percent of the American vehicle market, but
>> its share so far this year has fallen to 22 percent, according to the
>> research firm Autodata. Chrysler had a market share of about 15 percent
>> before its acquisition in 1998 by Daimler, but its share this year has
>> dwindled to 11 percent.
>>
>> How government and labor might react to a potential merger of G.M. and
>> Chrysler is unclear. Antitrust questions could be raised, but political
>> issues could be overshadowed by the precarious financial prospects of
>> both automakers.
>>
>> If G.M., the nation’s largest automaker, combined operations with
>> Chrysler, the smallest of Detroit’s Big Three, they would create an auto
>> giant that would surpass Japan’s Toyota Motor Company, which recently
>> has been battling G.M. for bragging rights as the world’s largest
>> automaker.
>>
>> A G.M. spokesman declined to comment on any specific talks with
>> Chrysler. “Without referencing this specific rumor, as we’ve often said
>> G.M. officials routinely discuss issues of mutual interest with other
>> automakers,” said the spokesman, Tony Cervone.
>>
>> There was no immediate comment from Cerberus.
>>
>> People briefed on the deal said the talks started as an exploration of
>> possible joint venture opportunities between G.M. and Chrysler.
>>
>> Cerberus acquired an 80.1 percent stake in Chrysler in August 2007 for
>> $7.4 billion from the German automaker Daimler AG.
>>
>> Under the terms of the deal being discussed, Cerberus would end up
>> owning an unspecified equity stake in G.M.-Chrysler, people briefed on
>> the talks said.
>>
>> The ramifications of the merger would be enormous in the global auto
>> industry. G.M. and Chrysler together would control more than 35 percent
>> of the United States vehicle market, and be by far the dominant producer
>> of pickup trucks, sport utility vehicles and minivans.
>>
>> It would also marry such iconic American brands as G.M.’s Chevrolet and
>> Cadillac with Chrysler’s Jeep and Dodge divisions.
>>
>> However, the potential merger carries enormous risks. Both G.M. and
>> Chrysler are struggling mightily in what is the worst market for vehicle
>> sales in the United States in 15 years.
>>
>> People close to the discussions said that if the prospective deal did
>> not happen, Cerberus would probably look to Nissan and Renault.
>>
>> But the marriage of G.M. and Chrysler has far more potential than
>> hitching Chrysler to a foreign automaker. While G.M. and Chrysler may be
>> hamstrung by labor contracts from cutting jobs, the two companies could
>> combine dealers, product lines and advanced vehicle technology.
>>
>> http://www.reuters.com/article/innov...49A0X420081011
>>
>> --
>> Civis Romanus Sum
>
> The question is who is the stronger part in the negotiation.
> GM has such huge overheads that it is difficult to maintain any form
> of profitable business in current car market.
> The profit margins become smaller and there are way too many people
> depending on there being a substantial part of the business being
> expensive cars especially in the GM half of the talks.
> In current market the most likely deal would be someone buying GM
> (total cost $2-3B) and slashing 2/3 of the top brass.
> There is enormous potential in knowledge within GM so it would be
> worth quite a lot.
> It is questionable what GMs worth is in a standstill.
>
> I can not see GM having special interest in taking over or merging
> with Chrysler because that would mean continue with the same stupid
> overheads and one more brand (actually sever more brands) of cars
> having a doubtful future.
>
>

There will be no, or darn few, customers for Detroit offerings at those
prices. Especially not for the Volt if it is priced north of $40K. An
excellent concept that died aborning.

--
Civis Romanus Sum